FirstCry, Ola Electric, Unicommerce IPOs: Investors Eye Big Returns On The New Market Entrants; How?

Investors who positioned themselves in FirstCry, Ola Electric, and Unicommerce at the right moment, are all set to reap healthy returns. These early adopters are poised to see their investments multiply significantly as these new-economy startups prepare to go public next week. Key investors such as SoftBank, Tiger Global, Mahindra & Mahindra, and Matrix Partners India are on the brink of realizing substantial gains, ranging from threefold to tenfold increases, according to data derived from the IPO prospectuses of these companies.

FirstCry

FirstCry, the omnichannel baby products retailer, has set an IPO price band with an upper limit of Rs 465. This valuation brings significant returns for early investors. SoftBank, for instance, will enjoy gains of over three times its weighted average cost of acquisition, which stands at Rs 154.40 per share. Mahindra & Mahindra (M&M), another early investor, will see an even more impressive return, with nearly sixfold gains on its investment.

In the offer for sale (OFS) segment of the FirstCry IPO, SoftBank is selling a stake valued at Rs 944 crore. Post-IPO, SoftBank's remaining shares will be worth Rs 4,825 crore, not accounting for potential post-listing fluctuations. M&M, which invested in FirstCry in 2016, is set to sell shares worth over Rs 130 crore, retaining a stake valued at Rs 2,349 crore.

Ola Electric

Electric vehicle manufacturer Ola Electric has also set an attractive IPO price band. Early investors Tiger Global and Matrix Partners India are poised to see their investments grow over six times and nearly ten times, respectively. The IPO will boost Ola Electric's visibility and market presence, likely leading to further growth in its valuation.

Founder Bhavish Aggarwal, who also established ride-hailing giant Ola Cabs and AI startup Krutrim, stands to gain substantially. Post-IPO, his stake in Ola Electric will be worth over Rs 10,000 crore. Additionally, Aggarwal is offloading shares worth Rs 288 crore through the OFS component.

Unicommerce

Unicommerce, a firm specializing in e-commerce enablement software, is another notable entrant in the IPO market. SoftBank, a major investor, is looking at an over threefold gain, with Unicommerce being valued at Rs 1,100 crore at the upper end of its IPO price band.

These anticipated gains highlight the importance of early investment in high-potential startups. SoftBank's positioning in these firms showcases the rewards of early and calculated investments in the tech and retail sectors.

Challenges for Late Entrants

While early investors are set to enjoy substantial gains, late entrants may face some short-term challenges. In FirstCry, for example, the IPO price band translates to a nearly 5% notional loss for late investors like cricket legend Sachin Tendulkar, Ranjan Pai of the Manipal Group, and Sharrp Ventures.

Similarly, in Ola Electric, Tekne Private Ventures and Alpine Opportunities Fund are looking at a notional loss of 32-33% on their investments. Singapore's Temasek will see a marginal gain of 1.2% if the share price hits the upper end of Rs 76 per share. However, the lower end of the price band is less than their weighted average acquisition cost of Rs 75.11 per share.

For the founders of these startups, the IPOs represent a significant milestone and a substantial financial windfall. Supam Maheshwari, founder and CEO of FirstCry, has already cashed in over Rs 300 crore through secondary transactions before the IPO. Post-IPO, Maheshwari's remaining stake in the company will be valued at over Rs 1,343 crore.

Bhavish Aggarwal's stake in Ola Electric shows the potential he sees in the electric vehicle market. His stake, worth over Rs 10,000 crore, represents both a personal achievement and a testament to the company's robust growth prospects.

The upcoming IPOs of FirstCry, Ola Electric, and Unicommerce are set to create significant value for early investors, founders, and the companies themselves. These listings will not only unlock capital for future growth but also solidify these startups' positions in their respective markets. The anticipated gains reflect the rewards of early investment and strategic foresight in emerging sectors.